Friday, 21 October 2016

Government decides to issue Sovereign Gold Bonds Scheme 2016 -17 Series III; Applications for the bond to be accepted from October 24, 2016 to November 02, 2016 and the Bonds will be issued on November 17, 2016

Government decides to issue Sovereign Gold Bonds Scheme 2016
-17 Series III; Applications for the bond to be accepted from October
24, 2016 to November 02, 2016 and the Bonds will be issued on November
17, 2016.

Government of India, in consultation with the
Reserve Bank of India (RBI), has decided to issue Sovereign Gold Bonds
2016-17 Series III. Applications for the bonds will be accepted from
October 24, 2016 to November 02, 2016. The Bonds will be issued on
November 17, 2016. The Bonds will be sold through banks, Stock Holding
Corporation of India Limited (SHCIL), designated post offices and
recognised stock exchanges viz., National Stock Exchange of India
Limited and Bombay Stock Exchange.
The features of the Bond are given below:

Sl. No.

Item

Details

1.

Product name

Sovereign Gold Bond 2016-17 - Series III

2.

Issuance

To be issued by Reserve Bank India on behalf of the Government of India.

3.

Eligibility

The
Bonds will be restricted for sale to resident Indian entities including
individuals, HUFs, Trusts, Universities and Charitable Institutions.

4.

Denomination

The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.

5.

Tenor

The
tenor of the Bond will be for a period of 8 years with exit option from
5th year to be exercised on the interest payment dates.

6.

Minimum size

Minimum permissible investment will be 1 grams of gold.

7.

Maximum limit

The
maximum amount subscribed by an entity will not be more than 500 grams
per person per fiscal year (April-March). A self-declaration to this
effect will be obtained.

8.

Joint holder

In case of joint holding, the investment limit of 500 grams will be applied to the first applicant only.

9.

Issue price

Price
of Bond will be fixed in Indian Rupees on the basis of simple average
of closing price of gold of 999 purity published by the India Bullion
and Jewellers Association Limited for the week (Monday to Friday)
preceding the subscription period. The issue price of the Gold Bonds will be 50 per gram less than the nominal value.

10.

Payment option

Payment
for the Bonds will be through cash payment (upto a maximum of Rs.
20,000) or demand draft or cheque or electronic banking.

11.

Issuance form

Government
of India Stock under GS Act, 2006. The investors will be issued a
Holding Certificate. The Bonds are eligible for conversion into demat
form.

12.

Redemption price

The
redemption price will be in Indian Rupees based on previous week's
(Monday-Friday) simple average of closing price of gold of 999 purity
published by IBJA.

13.

Sales channel

Bonds
will be sold through banks, Stock Holding Corporation of India Limited
(SHCIL), designated post offices as may be notified and recognised stock
exchanges viz., National Stock Exchange of India Limited and Bombay
Stock Exchange, either directly or through agents.

14.

Interest rate

The
investors will be compensated at a fixed rate of 2.50 per cent per
annum payable semi-annually on the nominal value of investment.

15.

Collateral

Bonds
can be used as collateral for loans. The loan-to-value (LTV) ratio is
to be set equal to ordinary gold loan mandated by the Reserve Bank from
time to time.

16.

KYC Documentation

Know-your-customer
(KYC) norms will be the same as that for purchase of physical gold. KYC
documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be
required.

17.

Tax treatment

The
interest on Gold Bonds shall be taxable as per the provision of Income
Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption
of SGB to an individual has been exempted. The indexation benefits will
be provided to long term capital gains arising to any person on transfer
of bond

18.

Tradability

Bonds will be tradable on stock exchanges/NDS-OM from a date to be notified by RBI.

19.

SLR eligibility

The Bonds will be eligible for Statutory Liquidity Ratio purposes.

20.

Commission

Commission
for distribution of the bond shall be paid at the rate of 1% of the
total subscription received by the receiving offices and receiving
offices shall share at least 50% of the commission so received with the
agents or sub agents for the business procured through them.